‘Need to align regulatory standard with best global practices’

NEW DELHI: India’s financial services secretary, Rajiv Kumar on Friday said the government is not seeking relaxation in the RBI’s Prompt Corrective Action (PCA) framework but emphasised the need to align banking regulations with best global practices.

He also said that domestic regulations are more conservative and stringent as compared to international best practices.

“Nobody can stand on its leg if you ease anything…Therefore what is being talked about is that it (our regulations) is aligned to best practices, which exist in the world. Take it from the best, align it to it, and don’t keep it higher than that. So, no relaxation of any norm,” he said when asked if the government has sought relaxation of PCA framework of RBI.

PCA framework puts restrictions on financially weak with the objective to halt the deterioration and reverse the trend.

As many as 11 out of 21 banks are under the RBI’s watchlist. Of these, two banks, Dena Bank and Allahabad Bank, are facing restrictions on business expansion.

Last month, state-run banks had requested the government for relaxation in PCA guidelines as these were indirectly impacting their lending ability.

However, RBI Deputy Governor Viral V Acharya earlier this month said imposition of the PCA was essential for the revival of financially weak banks and deepening reforms in the banking space.

The PCA framework is an essential element for safeguarding overall financial stability, he had said.